Tax Treatment of Collection-and-Payment-on-Behalf of Foreign Immigration Service Fees by a Law Firm
RegHub explainer by New MarketerLast updated:
Based on:Thông tư 103/2014/TT-BTC - Ministry of Finance
This explanation was generated by AI and checked by an automated AI review, not by a human expert. It is not legal, tax or accounting advice and may contain errors. Check the official document before you rely on it.
The tax authority provided guidance to Sophia Law Firm LLC (TIN: 0315746296) on the tax treatment of a scenario where the firm collects US immigration service fees from its clients and remits them to a US-based immigration service company under the EB-3 employment-based immigration program. The collection-and-payment-on-behalf amount is confirmed as excluded from the law firm's taxable revenue if supported by adequate documentation: legal service contract, agency/authorization agreement for collection on behalf, payment receipts, outbound remittance documents, and documents from the foreign immigration company (emails with attached contracts are acceptable even when US companies do not use official seals). Regarding foreign contractor tax (FCT): the immigration service fees remitted to the foreign company are subject to FCT and must be withheld and remitted by the Vietnamese party. For invoicing, the legal service fee portion and the collection-on-behalf portion must be shown separately on the invoice.
Tax Treatment of Collection-and-Payment-on-Behalf for US Immigration Service Fees
Legal Basis
- Circular 103/2014/TT-BTC on foreign contractor tax
- Relevant circulars on invoices and documents
- Regulations on collection and payment on behalf
Nature of the Collection-on-Behalf Amount
The amount transferred by the client to Sophia Law Firm for remittance to the US immigration company is excluded from the law firm's taxable revenue, provided that:
- The law firm earns no revenue or margin from this amount
- Sufficient documentation exists to prove the collection-on-behalf nature
Required Documentation
- Legal service contract between the client and Sophia Law Firm
- Immigration service contract between the client and the foreign immigration company (email with attached contract is acceptable even if the US company does not use an official seal)
- Agency/authorization agreement for collection on behalf
- Payment receipts from the client
- Outbound remittance documents
Foreign Contractor Tax Obligations
The immigration service fee paid to the foreign company is subject to Foreign Contractor Tax (FCT) under Circular 103/2014/TT-BTC:
- VAT: Deemed percentage rate on revenue by service sector (typically 5%)
- CIT: Deemed percentage rate on revenue (typically 5% for services)
- The Vietnamese party (Sophia Law Firm) is responsible for withholding and remitting on behalf of the foreign party
Invoicing Requirements
The invoice issued to the client must separately itemize two components:
- Legal service fee (subject to VAT) — the law firm's own revenue
- Immigration service fee collected on behalf — not revenue, clearly labeled as collection-and-payment-on-behalf